- Energy suppliers are repricing or axing tariffs due to soaring gas costs
The cheapest fixed energy deal is now over £100 more expensive than before the start of the Middle East war, as gas prices continue to surge.
UK gas futures have nearly doubled since the start of the war, from 77.93p per therm to around 155p.
Most households won’t feel an immediate impact from rising prices, because they are either protected by the price cap or signed up to a fixed deal tariff.
The price cap is expected to fall from £1,758 to £1,641 in April, but experts predict that if prices stay elevated, it could rise to £1,800 at the next review in July.
The price cap limits the amount suppliers can charge customers per unit of energy, and the above figures are based on households with ‘average’ energy usage.
Households on fixed-price tariffs are protected until their deals come to an end, but suppliers are already starting to increase the price of new deals, with some pulling them entirely as they work out how best to hedge against surging prices.
In the week since the war erupted, the number of fixed deals has dropped from 38 to 18, according to Uswitch.
Rising prices: The cost of fixed energy deals is increasing due to conflict in the Middle East
The cheapest fixed tariff for a household with typical energy usage was £1,509 when the conflict started. It is now £1,640 – an increase of £131.
Before the conflict, fixed tariffs ranged from £1,509 to £1,898 for an average dual-fuel household. This has jumped to between £1,640 and £2,194.
It comes after expert forecaster Cornwall Insight said that it expects the price cap to rise by more than £150 in July if prices stay at the current level.
Ben Gallizzi, energy expert at Uswitch said: ‘If volatility continues, suppliers will keep updating the prices of new fixed deals to reflect the current state of wholesale prices. The regulator will also have to factor this into future pricing of the price cap from July if the turbulence remains.
‘If you’re not already on a fixed tariff and want certainty about your energy bills, you may still find value in locking in rates for a year or more to avoid volatility caused by global events.’
While European gas prices have also rocketed, Britain is more exposed to energy shocks like this because it heavily relies on gas imports.
While the vast majority comes from Norway, the UK also relies on Qatar, which last week halted production of liquefied natural gas.
Gallizzi added: ‘It’s important households do not feel pressured into taking just any fixed tariff.
‘They should assess their options by running a quick comparison using their postcode to see tailored options available to their personal energy usage.’
Households on fixed tariffs will receive a reduction to their unit rates from April, as the Government has scrapped certain energy levies.
The price cap will also fall because of this.